Economic impact of a provincial fuel levy: A CGE analysis
South African Journal of Economics
University of Sheffield, Sheffield, United Kingdom; Department of Agriculture, Western Cape, South Africa
Provincial governments in South Africa, commencing with the Western Cape, are expected to institute provincial fuel levies in addition to the existing national fuel levy in future. This paper presents results from a Computable General Equilibrium (CGE) model calibrated with a detailed Social Accounting Matrix (SAM) to evaluate the effects of a 3 per cent provincial fuel levy implemented simultaneously in all provinces. The results are presented for the petroleum products market, government, the macro economy, industries, factor income (including employment) and household income and expenditure. Results indicate that although the impact of the fuel levy is not drastic, it is large relative to the expected revenue gain. The impact is distributed more uniformly than was expected. © 2006 The Authors. Journal compilation © 2006 Economic Society of South Africa.
computable general equilibrium analysis; economic impact; fuel; petroleum; policy analysis; tax system; Africa; South Africa; Southern Africa; Sub-Saharan Africa